Mergers, Acquisitions and Financial Results

Orascom Telecom Holding S.A.E. announced last week the closing of €330 million in debt and equity financing by its GSM operation in Tunisia, Orascom Telecom Tunisie S.A. ('OTT'). A portion of the proceeds was applied to the USD227 million final payment for OTT's GSM license awarded in May 2002. The €310 million in debt financing and USD23 million in new equity completes the permanent capital structure of OTT. After payment of the license, the financing will fully fund OTT's projected network investments.

The debt financing represents one of the largest project financings in Tunisia to date, the first true limited recourse project financing in the telecom sector in the past two years. The limited recourse facilities include a sponsor support mechanism backed by an OTH corporate guarantee for €17.5 million. The ultimate exposure to OTH is much lower due to agreements with other minority shareholders. The debt will be repaid over seven years and consists of an export credit facility of €130 million in two tranches covered by Coface and Euler-Hermes respectively, a structured finance facility of €160 million, and a short term loan of €20 million. DEG - Deutsche Investitions und Entwickelungsgessellschaft mbH, the Netherlands Development Finance Company (FMO), the OPEC Fund, and Proparco contributed €50 million in dedicated tranches within the structured finance facility; the remaining €130 million was placed with a syndicate of international banks. Arab Banking Corporation BSC, Bayerische Hypo- und Vereinsbank AG, KfW IPEX Bank and Standard Bank London Ltd were joint lead arrangers for the debt financing.

The equity funding is comprised of a capital increase of USD23 million. Orascom Telecom Holding holds a total proportionate 20.5% ownership stake in OTT and controls the company jointly with its joint-venture partner, National Mobile Telecommunications Company Ltd (Wataniya Telecom).

Orascom Telecom Tunisia, operating under its brand 'Tunisiana', is one of the most successful private companies in Tunisia. Since commencement of commercial operations in December 2002, OTT has added approximately 880,000 active subscribers representing around 29% of the country's mobile market and built a network serving 90% of Tunisia's 9.9 million inhabitants. The company has been EBITDA positive every quarter since its commercial launch.

The transaction underscores OTH's commitment to enhance services for consumer and corporate customers, to invest in high quality networks, and to continue to drive the rapid development of the mobile market in Tunisia and in other emerging markets countries where it operates.